Public Option for Student Loans

As Curt astutely pointed out, the US lost an additional 85,000 jobs in December bringing the yearly total of job loss to 2.5 million and increasing the unemployment rate to 17.3 nationwide.

With this news in mind, the Obama administration is pushing a 1 trillion government takeover of student loans through Democrat senator Tom Harkin's HELP committee. This scheme will eliminate private lenders, in turn adding more citizens to the growing unemployment number and end up giving the government sole control over student loans. This will drastically impact everyone's ability to decide how they will finance a university education. If it is anything like the healthcare bill, with politics trumping coverage, will some states benefit because their Senator held his or her vote in exchange for more goodies, leaving the other states to pick up their tab?

“My guiding principle is and always has been that consumers do better when there is choice and competition. That's how the market works.” (Obama’s speech to Congress,9/9/09)

On a sinister note, the fact that Obama wants to dole out unlimited funds in student loans and then offer to forgive those loans for anyone who “serves” the Federal gov’t for 10 years is about as blatant a plan to enslave millions of young Americans as any plan that you can imagine.

As for the economic affect of Obama’s plan... Dr. Thomas Sowell explains perfectly why the cost of college is skyrocketing while at the same time the quality of the education received is plummeting in his book “Economic Facts and Fallacies”. It is worth the price of the book just for that one single chapter!

Any parent (or student) who is considering taking out tens of thousands or in some cases hundreds of thousands of dollars of college loans for their kids (or themselves) needs to read Dr. Sowell’s book before taking one more step forward.

In a nutshell, the cost is skyrocketing because the schools know that the gov’t is going to make sure that practically everyone can take out an almost unlimited amount of student loans.

Because of the easy-to-get student loans, schools have no incentive whatsoever to lower their costs (as a matter of fact it gives them incentive to raise their costs as high as possible) and consumers have much less of an incentive to shop for low cost, high quality no-frills education like they would for a product that they had to pay for out-of-pocket.

In other words, just like the housing bubble was inflated by cheap, easy money and the “everybody deserves to own a home right now” mentality... so too is the cost of education being inflated by easy student loan money and the “everybody deserves a college education” mentality.

Just as sellers had no incentive to lower their prices when they had droves of buyers lining up to buy their properties, colleges have no incentive to lower their prices when they have gullible parents and students who are taking out easy to get loans to buy their education.

If people had to work for, save up for and/or pay for college out-of-pocket, they would do a better job of comparison shopping and colleges would have to do a better job of educating for much less tuition.

Instead,institutions of “higher learning” have become a type of “club med” daycare where students look forward to easy classes and cushy living environments and teachers often work from 10 - 2 (if that) and laugh all the way to the tenured bank (your head will explode when you read Dr. Sowell’s explanation of the consequences of those short work day hours).

Anyhoo, not saying that college is worthless... just saying that the college education we are getting for our money isn’t worth the astronomical costs... and easy gov’t money is exacerbating the problem. If the free market were allowed to work, cost would go down and quality would go up.

Same goes for healthcare... but what are the odds of Obama the Marxist letting the free market work?... zero.

With Obama, there's always strings attached ... he's already telegraphed his Socialist left-hook before he was even inaugurated. Obama's website changed shortly after this screen shot in early November 2008; it has since changed. Prior to that, Obama's website said:

Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year.

If you take the money or a "tax credit", a/k/a "American Opportunity Tax Credit" for college, you'll owe back a minimum of 100 hours of Community Service, plus ample opportunity for more indoctrination. In a few years, count on it being many more hours of Community Service if you accept money from Uncle Obama's stash.

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